wage differentials Flashcards
Explain how MRP of labour causes wage differentials
People are high skills they offer more revenue therefore have a higher MRP therefore the demand for labour increases so the wage increases. This could be due to productivity skills and training.
Explain how wage elasticities cause wage differentials
WESL elastic - low wage easily replaced if demand increases increased in wage
WESL inelastic- skilled higher MRP long training cannot replace
Inelastic supply and inelastic demand then there is a high wage
How does the supply of labour affect wage differentials?
When supplies low and demand is high wages increase
When demand is low and suppliers high wages decrease
Explain how discrimination affects wage differentials
An employer perceives one group to have a higher MRP than another
Education opportunities
Interruptions
Hiring bias
Racism ableism sexism
